You’ve arrived – you have the big job and you’ve just earned your first pay cheque. Congratulations! Now, what are you going to do with it? Most first time earners feel the need to spend it all and, while there’s nothing wrong with enjoying your hard-earned money, this kind of attitude often leads to an unstable financial future, living from month to month.
Most people think they are too young to worry about their wealth but the opposite is true. We work hard so that we can enjoy a certain lifestyle rather than just making money for the sake of making money. Looking after your salary from the time you start earning it will stand you in good stead long into the future.
Here’s what we suggest you do with your first salary:
1. Set up a budget
You’ll never really be able to manage your money if you don’t know where it’s going every month. Make a list of all your expenses (be honest) and tally up where your money is used. Do you need to cut down on certain purchases? Are you shocked at how much you’re going to spend this month on non-essentials? Understanding your income and your cash flow will put you on the right path to effective money management.
2. Save straightaway
The sooner you start putting money away, the better. It is never too soon to start an emergency fund or to plan for your retirement. Treat saving like a bill that you have to pay and do it first thing in the month. Make it a habit and you’ll get used to it in no time and reap the benefits for years to come.
3. Consider investing
Letting your savings just sit in your bank account is hardly ever to your advantage. Rather, you need to get your money working for you. Invest wisely – educate yourself, make informed decisions, and seek professional help from a reputable financial adviser.
4. Get the necessary insurance
Insurance might seem like a grudge purchase but life is full of unexpected (and sometimes nasty) surprises. From life insurance to medical aid, you need to be prepared for threats to your ability to earn an income and support yourself. Even if your company provides benefits, you might need something more. A professional financial adviser can help you determine what polices you need.
5. Do something for someone else
As much as money is there to be protected (so that you can have the lifestyle you want), it is also there to be enjoyed. But, better than a once-off purchase of something you don’t really need is the gift of giving. Take some of your hard-earned cash and give it away. Support a charity that’s close to your heart or buy a gift of appreciation for your parents who have supported you up until this point. This doesn’t have to be a big ticket item – whatever the amount, it will add to your appreciation of money and what it can do.
The time to start protecting and growing your wealth is now. Start with your first salary and work your way up from there.
Need help? As wealth management experts, we specialise in the finances of working professionals just like you.